This paper establishes the importance of Bank Reconciliation as a mandatory activity for ensuring effective financial management. Every financial manager wants to keep close tab on the bank balances as his job involves real time decisions that have cost implications in his favor or against. A little delay in the clearing of an effect could result in huge financial losses to the organization in terms of interest charges or other opportunity costs. A delay could also be the source of loss of goodwill which can spell huge consequences for the entity’s business relationships. The paper affirms that there are several ways of carrying out bank reconciliation.
However, it further concludes that the bank reconciliation process ensures that undue losses are not sustained through inadvertence of the staff of either the focal organization or the bank.
Key words: Bank reconciliation; Opportunity cost; Uncleared effect; Uncredited cheques; Stale effects;Due date; Unpresented effects; Effective financial management; Fair view; Due process
